Israel, Gaza startups, tech workers face unexpected war footing

Israel is at war with Hamas after the group attacked civilians and security forces earlier this month; at least 1,400 people in Israel were killed in the initial Oct. 7 attack, and more than 2,800 have been killed and 10,000 injured in Gaza since the conflict began, according to the New York Times.

Israel’s flagship tech industry, while a small portion of the many people affected by the ongoing violence, accounts for one-fifth of its GDP and employs 14% of its workforce. And it’s been feeling the effects of the upheaval: Startup employees and founders are among the 360,000 military reservists that have been called up for active duty.

Some companies have seen as much as half of their employees reporting for duty, according to Eric Reiner, founder and managing partner of Vine Ventures, who spoke with the Wall Street Journal. Earlier-stage companies are more likely to be affected because their workers tend to be younger—and consequently more likely to get mobilized, Roy Glasberg, of the venture firm AnD Ventures, told the newspaper.

Doron Tamir, the co-founder and CEO of Tel-Aviv-based experimental waste heat engine startup Luminescent Heat Engine, shared with Tech Brew last week that 30% of his staff has been summoned for duty. Operations are slower, he said, and some key tasks can’t be completed in employees’ absence. On top of that, there’s the atmosphere: “It’s impossible to work,” Tamir said.

He has been volunteering with Brothers and Sisters in Arms, a group of former soldiers who shifted from protesting Prime Minister Benjamin Netanyahu’s government’s proposed judicial reforms to supporting soldiers and aiding residents of southern Israel, where the attacks took place. He still works at his regular job until noon, but then heads to provide volunteer service.

Working through war

Companies in Israel are adapting to wartime operations: Venture capitalist Avi Eyal told the Wall Street Journal that some firms are reassigning work to employees in the US and Europe.

Initial personal accounts shared on social media have presented a difficult scene for business operations. US investor Micah Rosenbloom shared on X an account of an entrepreneur in Israel who was drafting a contract minutes before his military shift began. Separately, on LinkedIn, Adam Singolda, chief executive of ad-tech business Taboola, posted concerns about how the violent events would impact the company’s workforce.

Meanwhile, things are far from business as usual for tech startups and outsourced employees in the West Bank and Gaza, Axios reported. Israeli air strikes in Gaza have forced Gazan tech workers to evacuate or seek shelter, while many in the West Bank are working from home, unable to commute to their offices in the territory or within Israel.

Larger companies in the region are also on unstable ground amid the turmoil. As of Tuesday morning, Bluestar Israel Technology ETF has fallen around 5% since the conflict began.

“Overseas investment will slow for the next couple of weeks and months,”Jon Medved, the CEO of Israeli VC firm OurCrowd, told Reuters. In the meantime, some VCs have been plugging cash into the country in a humanitarian way by making donations to charities.

Update 10/17/23: This piece has been updated with additional information since it was first published.